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3PL Subway 2015: Strategic movements among logistics providers

After years of declining revenues in European logistics services, the business started to stabilise in 2013/2014. Europe has seen plenty of activity in terms of mergers and acquisitions, including the take-over of the major French family-owned company Norbert Dentressangle by America’s XPO Logistics. For the third consecutive year, Supply Chain Movement has put together a 3PL Subway Map Europe showing the specific services of the most important logistics service providers which have offices in several European countries.

By Martijn Lofvers

The logistics business in Europe is finally improving again. According to the figures by Armstrong & Associates for 2012 to 2013, global 3PL revenues rose only modestly (by 2.7%), while the growth rate in Germany was just 0.87% and a meagre 0.01% in Europe as a whole. However, Technavio’s analysts now forecast the 3PL market in Europe to grow at a CAGR of 2.87% over the period 2014-2019.

Shipper-3PL relationships

In the 19th Annual Third Party Logistics Study published earlier this year, the survey results show the continuing, positive overall nature of shipper-3PL relationships. 73% of those who make use of logistics services and 77% of 3PL providers are satisfied that they have received open, transparent and effective communication from their partners.

The 2015 Annual Third Party Logistics Study also reveals that both sides regard themselves as being successful, and shippers are seeing positive results again this year: an average logistics cost reduction of 9%, an average inventory cost reduction of 5% and an average fixed logistics cost reduction of 15%. In addition to these cost reductions, shippers indicate that they have seen improvements in their average order fill rate and order accuracy. Strangely enough, though, the order accuracy improvement has taken place at a lower level (from 60% to 66%) in 2015, whereas it improved from 67% to 72% in 2013.

Similarly to last year, several factors are continuing to impact on progress towards the advanced end of the maturity model for shipper-3PL relationships. The generally less-than-exciting levels of global economic activity are driving highly variable and sometimes sluggish or neutral demand for outsourced logistics services. Shippers report that an average of 36% of their total logistics expenditure is related to outsourcing compared to an average of 44% reported last year. Globally, warehousing is outsourced by 67%. In comparison, according to Fraunhofer Institute, warehousing is outsourced by 54% in Germany, which is the largest logistics market in Europe.

Mergers and acquisitions

Acquisitions dominated the logistics headlines in 2014 and that trend is continuing this year. The Japanese freight mover Kintetsu World Express has expanded recently outside its home market with the acquisition of APL Logistics, which has a strong base in America and Europe. Following UPS’s failure to do so in 2013, FedEx succeeded in acquiring TNT in April 2015 in order to expand its European footprint. The American 3PL company XPO Logistics has made a similar move with the acquisition of the major French family-owned company Norbert Dentressangle (ND). “With ND, we are entering a whole new theatre or arena, and I would say that in the next two years we will do a handful of acquisitions in Europe,” stated Brad Jacobs, CEO of XPO Logistics, when the proposed acquisition was announced.

Europe can expect to see more activity from large logistics service providers on the back of XPO’s acquisition of ND, and this will of course be reflected on Supply Chain Movement’s 3PL Subway Map Europe in the years ahead.